How to start a business in UAE?

company formation in free zone

Once you have decided to form your company in the UAE, the number of choices can be discouraging. As with all business essentials, it is very important that your choice of business structure is determined by the exact requirements of the business. Given below are the types of business structures available in the UAE:

  1. Free Trade Zone Entities
  2. Mainland Companies
  3. Offshore Companies

How to start a business in UAE Free Trade Zone?

There are more than 50 free trade zones available in the UAE. The Different Emirates are having different free zones. In Dubai itself, there are around 40 free trade zones available. Among them, the major free trade zones are Jebel Ali Free Zone (JAFZ), Dubai Airport free zones (DAFZ), DMCC, DCCA and many more free zones. Free trade zones are made, based on the activities. For example, Dubai Media City, Sharjah Media City Free Zone, Two Four Fifty-four are different media free zones in the UAE.

  • 100% foreign ownership of the companies, and are
  • Exempt from corporate and personal taxes for a specified number of years.
  • They are most commonly used for import / re-export or for industrial or manufacturing companies.
  • Many service-related companies also use free zones as their base of operations.
  • The key point to note is that these entities are not licensed to do business outside of the free zones.

While starting a business, we can select a free zone based on the client’s requirements such as office space, warehouse requirements, power requirements etc.

In Free Trade Zone we can start a business with the flexi facility as well. Hence, starting a company in a free zone will always be cheaper. The price will vary with different free zones.

To start a business in a free zone below mentioned are the basic documents required:

  • Passport copy of the shareholders.
  • Passport size photographs with white background.
  • 2 – 3 suggested names for the new company.
  • Specify the required activity
  • Number of visas required

As Emirates Chartered Accountants Group is the main channel partners for all the free zones we can suggest the most suitable free zone and support the clients to form a company as per their requirement.

How to start a business in UAE Mainland?

Mainland Companies:

Mainland will come under Department of Economic Development (DED). There are seven DEDs in seven emirates.

To start a business in mainland It is compulsory to nominate a ‘local sponsor’. This is only to ensure that there is a liable person, in the country, who is able to provide answers and direction in any event where the foreign owner is unable or unwilling to assist. Based on the activities required by the clients we have to select which type of company is to be formed.

The limited liability company (LLC) is set up with the local sponsor owning 51% of the shares. However, under company’s law, the profit of the corporation need not be distributed in proportion to the shareholder holdings. The local sponsor is paid a yearly fixed fee to use his name while the resident director /owner and the foreign owner manage and distribute the profits at their will.

The professional licenseAllows 100% of the shares to be allocated in the name of a foreigner and the local sponsor is only designated a ‘local service agent’ role. This entitles him to a yearly fixed fee for his role as a sponsor in the trade license. The owner of the license must be educationally qualified in the professional service, which they intend to provide.

A representative office licenseThis allows the company to engage in marketing and gathering information on behalf of the parent company. In this case, the requirement is to have a local service agent, who is not obliged to be the shareholder of a company.

The process flow of starting a company in Mainland.

  • Obtain an initial approval for name and activity from the Department of Economic Development.
  • Obtain approval from relevant Ministry / Department in case the activity is of special nature.
  • Draw up company’s Memorandum of Association and have it notarized from the courts.
  • Finalize office tenancy in a commercial building and get it attested by Real Estate Regulatory Agency.
  • Obtain necessary approval from Dubai Municipality Planning Department.
  • Submit applications and initial approval along with a notarized copy of Memorandum of Association, tenancy contract etc., to the Department of Economic Development.
  • After scrutiny by the legal department, the Company name will be entered in the Commercial Register and its Memorandum of Association published in the Ministry of Economy Bulletin.
  • The Department of Economic Development will then issue the license.
  • Registration of the Company with Ministry of Labour and Department of Immigration.
  • Registration with Dubai Customs Department and getting the Customs Code issued.

Emirates Chartered Accountants Group can support customers for finding out the individual local sponsors and corporate sponsors.

How to start a business in UAE offshore Jurisdiction?

This type of entity helps you to run your business or asset ownership in the Middle East in the most profitable manner. Especially because you avoid the cumbersome process of having the offshore incorporation company documents attested by various embassies and Ministries of Foreign Affairs. In the UAE, offshore incorporations require an agent. The offshore package offered by any service provider stipulates that the agent representing the service provider would act as a link between the newly formed offshore enterprise and the local government.

 In UAE there are three offshore jurisdictions such as Jebel Ali offshore, RAK Offshore (RAKICC) and Ajman offshore. Emirates Chartered Accountants Group is a registered agent in all of these offshore jurisdictions and hence, we can set up offshore / international companies for customers.

The following are the requirements for starting a business in UAE Offshore Jurisdiction.

  • Passport copy of the shareholders with at least 6 months’ validity.
  • Recent Utility bill in the name of the applicant for the proof of residence.
  • Bank reference letter.
  • CV of the shareholders.
  • Application signed (we will prepare).
  • MOA & AOA signed (we will prepare).
  • Four trade name suggestions.
  • UAE entry stamp on the passport.

 

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